The "Great Recession" Destroyed The CBO's Previous Estimates

I was reading an article on CNBC.com (link below) that helps to illustrate just how much damage has been done to the US economy over the past two years.

According to the article, the CBO (Congressional Budget Office) in 2008 was predicting that the United States would post a SURPLUS of $247 billion from 2009 through 2018.

The CBO now projects that the United States will post a total deficit of $7.4 trillion over that same period of time (2009-2018).

According to CNBC, this massive swing means that every man, woman and child in the United States will lay claim to an extra $25,000 in debt by the end of 2018. A cumulative deficit of this size will obviously have far-reaching implications for the United States. Some of the negative implications of an $8 trillion swing - increased borrowing costs, a weakened US dollar and increased taxes going forward.

According to the article, a vast amount (57%) of the $8 trillion change came as a result of declining revenues. The US government has been particularly hard-hit by the decrease in personal income tax receipts as a result of the challenging employment market. Plunging asset values and decreased corporate income tax receipts have also conspired to shrink revenues for the US government.

In addition to the rapid decrease in revenues, the CBO also blamed the following on their dramatically changed budget outlook for the US:

In short - the economic meltdown of 2008 really messed up with CBO's budget projections from 2009-2018. The US government was forced to contribute massive amounts of money to keep the financial sector afloat during the darkest days of the financial meltdown. The US government suffered from a drop in personal income tax receipts due to the recession. The US government was forced to pay greater than expected amounts of unemployment benefits due to the recession. The US government collected less corporate tax revenues than expected due to the recession. The US government collected less money for the Social Security fund than expected due to the recession. The government had to pay for an expensive stimulus bill. The government will have to pay much more money than previously expected to service their debt going forward. The list goes on and on.

Add all of this up and you have an expected $7.4 trillion in total deficits from 2009 to 2018, rather than a (now laughable) surplus of nearly $300 billion.